Why Is C.H. Robinson (CHRW) Down 7.9% Since Last Earnings Report?
A month has gone by since the last earnings report for C.H. Robinson Worldwide (CHRW). Shares have lost about 7.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is C.H. Robinson due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
C.H. Robinson Q2 Earnings In Line
Quarterly earnings of 90 cents per share came in line with the Zacks Consensus Estimate and declined 66.2% year over year. Total revenues of $4421.9 million lagged the Zacks Consensus Estimate of $4646.5 million and declined 35% year over year owing to lower pricing in the company’s ocean and truckload services.
Quarterly results were impacted by soft freight markets globally. Overall weak demand, high inventories and excess capacity led to a more competitive marketplace and subdued transportation rates.
Operating expenses declined 5.2% year over year to $532.9 million in the second quarter. Adjusted gross profit fell 35.5% year over year to $665.5 million, owing to lower adjusted gross profit per transaction in truckload and ocean. Adjusted operating margin of 19.9% declined 2,560 basis points.
Segmental Results
North American Surface Transportation’s total revenues were $3,079.26 million (down 25.7% year over year) in the June quarter owing to lower truckload pricing. Adjusted gross profit of the segment declined 35.9% to $400.5 million.
Total revenues from Global Forwarding fell 62.7% to $779.9 million, owing to lower pricing in CHRW’s ocean service. Adjusted gross profit of the segment fell 44.8% year over yearto $179.2 million
Revenues from other sources (Robinson Fresh, Managed Services and Other Surface Transportation) increased 0.8% to $562.72 million.
Below we present the division of adjusted profit among the service lines (on an enterprise basis).
Transportation: The unit (comprising Truckload, LTL, Ocean, Air, Customs and Other logistics services) delivered an adjusted gross profit of $631.26million in the quarter under consideration, down 36.8% from the prior-year figure.
Adjusted gross profits of Truckload, LTL and Customs declined 42.8%, 18.5% and 9.7% year over year to $261.14 million, $137.18 million and $25.12 million, respectively. However, other logistics services’ adjusted gross profit rose 8.2% to $66.58 million.
Adjusted gross profit of the Ocean transportation segment fell 52.8% year over year. The metric fell 40.7% to $33.72 million in the Air transportation sub-group.
Balance-Sheet Data
CHRW exited the second quarter with cash and cash equivalents of $210.15 million compared with $239.16 million at the end of March 2023. Long-term debt was $920.49 million compared with $920.27 million at the end of March 2023.
CHRW generated $224.8 million of cash from operations in the second quarter. Capital expenditures were $24.4 million in the reported quarter.
In the second quarter of 2023, CHRW repurchased shares worth $33.4million and paid $72.8 million in cash dividends.
2023 Outlook
Capital expenditures for 2023 are anticipated to be between $90 million and $100 million. Full-year effective tax rate is projected in the range of 16-18% (prior view: 19-21%).
Sourcing: Net revenue at the segment increased 3.9% year over year to $30.41 million.
Liquidity
Sourcing: Net revenue at the segment increased 3.9% year over year to $30.41 million.
Liquidity
Below we give a historical presentation of results on an enterprise basis.
Transportation: The unit (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) reported net revenue of $538.1 million in the first quarter of 2017, up 0.8% from the year-ago quarter.
Below we give a historical presentation of results on an enterprise basis.
Transportation: The unit (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) reported net revenue of $538.1 million in the first quarter of 2017, up 0.8% from the year-ago quarter.
Below we give a historical presentation of results on an enterprise basis.
Transportation: The unit (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) reported net revenue of $538.1 million in the first quarter of 2017, up 0.8% from the year-ago quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -8.83% due to these changes.
VGM Scores
Currently, C.H. Robinson has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, C.H. Robinson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
C.H. Robinson belongs to the Zacks Transportation - Services industry. Another stock from the same industry, Hertz Global Holdings, Inc. (HTZ), has gained 6.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Hertz Global Holdings, Inc. reported revenues of $2.44 billion in the last reported quarter, representing a year-over-year change of +4%. EPS of $0.72 for the same period compares with $1.22 a year ago.
For the current quarter, Hertz Global Holdings, Inc. is expected to post earnings of $0.94 per share, indicating a change of -13% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Hertz Global Holdings, Inc. Also, the stock has a VGM Score of B.
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C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report
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